See FY13 subsidy share rising by Rs 10,000cr: ONGC

The Ministry of Petroleum and Natural Gas has proposed to double the price of gas to USD 8-8.5 per million metric British thermal unit (mmBtu) sometime this calendar year, as recommended by the Rangarajan committee.

Also read: Uniform gas price policy to be brought soon: Moily

Sudhir Vasudeva, chairman, ONGC confirmed to CNBC-TV18, the company has not received any communication from the government on administered price mechanism (APM) gas price hike yet. The APM gas price would make several projects viable if it goes through. If it is raised to USD 8/mmbtu then we can commercialise new discoveries, he added.

In 2010, the government had increased administered price mechanism gas prices by more than 100 percent. However, Vasudeva pointed out that even at USD 4.2/mmbtu, the gas business is not profitable.

Meanwhile, he sees ONGC's FY 13 subsidy share rising by Rs 10,000 crore on a year-on-year basis.

Below is the edited transcript of his interview to CNBC-TV18 

Q: Have you heard any kind of update from New Delhi on such a proposal being considered by the cabinet and how material would it be for Oil and Natural Gas Corporation (ONGC's) earnings if such a price hike were to come about?

A: We haven't heard any thing officially from the ministry. However, whatever the media is reporting is music to our ears. In case the gas prices increase both from the viewpoint that it would be applicable to our existing gas with immediate effect. This will also help us in putting our deep water discoveries on production because those projects will become more viable.

More to come…